not our war
market vibes
Gold
There are a lot of opinions why gold went down this month. This is mine: The GCC (Gulf Cooperation Council, KSA, Kuwait, UAE, Iraq, and Qatar (Iran)) have been acquiring circa $7 trillion USD in Treasuries, gold and equities for many years. These assets are official reserves, Sovereign Wealth assets, HNW home office and private 3rd party “offshore” holdings mostly in European money centers.
These assets are deliberately liquid for the very reasons their vulnerabilities have imposed on them these last 3 weeks. GCC nations are generally leveraged on paper between 30 to 50% depending per each. They are heavily dependent on cash flow (trailing in arrears) and the closure of the Strait of Hormuz has deprived them of cash flow for at least 21 days.
When the US initiated hostilities on March 2, all parties had pre-gamed their courses of action. In my unfolding scenario, GCC nations either in concert or secretly started liquidating gold, equities and Treasuries. As the days passed the collateral value of their portfolios declined and the lenders who held collateral title vs GCC debts called for margin.
Lenders would have been circumspect about further terms for credit as infrastructure was being targeted, hundreds of ships trapped behind the strait and wells were being capped. As the fighting escalated, prices fell organically and by their own doing as their sales increased.
Judging from the chart, the GCC must have started selling gold immediately on Sunday, March 2. If that is true, a handful of people directed the sales and a handful of very senior traders saw the flows. At that stage banks don’t leak. They act. By March 7 perhaps as many as 100 people saw or knew the GCC was selling gold. By March 9 when oil traded $119, one of THE most bullish events in the history of gold trading… gold went down $160.00.
On Tuesday March 3rd referring to bonds I said, “Short term liquidation may be foreign selling” (no facts just noodling/thinking GCC??). On March 13 gold settled at a new low for the month at $5014.00, down $400 since the fighting began. I wrote, “Gold traded heavy all week so someone has been outsizing the war buyers with sales” (clearly meaning GCC).
On March 18 when gold broke $5000 and settled at $4960.00 I wrote, “If gold is a safe haven it is useless in times of stress if not deployed to a purposeful remedy” (meaning…GCC selling). That evening in the wrap I finally said it in plain spoken terms: “When gold actually goes down at the onset of an oil war in the Middle East, the raison d’être for owning gold fails. When it goes lower as the war intensifies and the Strait of Hormuz is closed… that is a bearish divergence. I have opined recently the GCC nations might be selling gold and bonds to meet a shortfall of cash flow.”
Bonds
Since 1950 there has never been an instance of bond prices falling at the outset of any war. US T Bonds are the most reliable safe haven above all other assets. In 2023, Silicon Valley Bank failed and bonds rallied 10 big handles. In July 2024 there was a stress bubble in USD/JPY and bonds rallied 8 big handles. In April 2025 as the stock market fell 20% bonds rallied 10 big handles.
The United States is the world’s largest producer of oil and gas in the world. This conflict only enhanced that status and the practical safety of US Treasuries. Financial data has been docile. The financial community has been forecasting 3 cuts in 2026. Gundlach was sanguine about inflation after the FOMC presser and futures prices on the NYMEX have been almost blasé.
The IEA has begun releasing up to 400 mm bbls of Global SPR (10mm bpdish). There are 140 mm bbls of recently unsanctioned Russian oil available courtesy of Bessent… and 200+ mm bbls in ships waiting to exit the Strait. In addition the total global and commercial tally of crude in storage is roughly 5.5 billion barrels of which China has 1.5 billion barrels.
Michelle Bowman voting member of the FOMC said on Friday morning she expects 3 cuts in 2026 and the bond market did this.
There’s a lot to look at now. A lot has happened in 24 hours, but let’s take look at what the President said first.
